COST ACCOUNTING
INVENTORY AND PRODUCTION MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Sales, COGS, Margin, Cost, Profit
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Sales, Fees, COGS, Margins, Number of Visits
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AP, Cost, Hpp Margin
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AP, Sales, Cost, Operating Profit/Loss
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Detailed explanation-1: -Cost of Goods Sold (COGS) measures the “direct cost” incurred in the production of any goods or services. It includes material cost, direct labor cost, and direct factory overheads, and is directly proportional to revenue.
Detailed explanation-2: -The cost of sales is calculated as beginning inventory + purchases-ending inventory. The cost of sales does not include any general and administrative expenses. It also does not include any costs of the sales and marketing department.
Detailed explanation-3: -The main components of COGS are the direct expenses incurred such as production costs, inventory acquisition expense, labor, and raw materials. Indirect costs such as marketing and distribution are not included in COGS.
Detailed explanation-4: -The gross profit margin is calculated by subtracting direct expenses or cost of goods sold (COGS) from net sales (gross revenues minus returns, allowances and discounts). That number is divided by net revenues, then multiplied by 100% to calculate the gross profit margin ratio.